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Lecture

Class note Fall 2010_CH1 Completed notes


Department
Economics
Course Code
ECON 102
Professor
Angela Trimarchi

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Chapter One
What is Economics?
-Economic studies how:
- Society manages its scarce resources
- People use scare resources to satisfy
unlimited human wants
Also
-Economics is a social science (behaviour as human)
Economic Resources:
-Land : natural resources
-Labour: physical and mental effort used in
production
-Capital: machinery, equipment, structures
-Entrepreneurship: coordinate resources
(putting resources together)
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Key Idea:
-Scarcity
-People must make choice
-Making choices leads to cost!
Opportunity cost: The best alternative forgone
-Also the sum of direct costs and indirect costs
(Direct cost - paid for out of pocket
Indirect cost – not paid to anyone but is still a cost)
Question: List the direct and indirect costs
(opportunity cost) of going to the movies
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Two Main Branches of Economics:
Microeconomics
- Studies individual economic unit
Macroeconomics
- Studies economy – wide phenomena
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